7 Juicy Reveals in the Fight Over Hulu from Bombshell WSJ Report – IndieWire
Disney’s chief executive officer Bob Iger has said his recent talks with Comcast CEO Brian L. Roberts over their shared streaming service, Hulu, have been congenial. However, the Wall Street Journal reported Thursday that was not always the case.
The years-long Hulu tug o’ war between the two companies includes a gigantic valuation gap, calculated — and secretive — maneuvering, and outright fury from both sides. Below are the seven juiciest (yes, corporate-buyout posturing can be juicy!) details from the report.
IndieWire has reached out to both Disney and Comcast for comment on the WSJ story. We did not immediately receive a response from either side.
It’s Not a Valuation Gap, It’s a Canyon
Unsurprisingly, Comcast, which is likely to sell its one-third ownership stake in Hulu to Disney in early 2024, has a much more generous valuation in mind than its would-be buyer, Disney. However, the chasm between their respective internal valuations is wider than many probably thought.
In 2021, NBCUniversal execs put Hulu’s value “at north of $70 billion,” per the WSJ’s sources. Disney’s own valuation of the service is “tens of billions of dollars” lower. In 2023, it’s unlikely that even Comcast/NBCU would peg Hulu’s valuation at $70 billion, but it wouldn’t hurt to try!
The years-ago agreement between the broadcasters values the streamer at a minimum of $27.5 billion — but that was based on Disney using Hulu as its international service, a person with knowledge of that original agreement told IndieWire. Based on that number, Comcast’s one-third is a bit north of $9 billion. But of course, that’s just the minimum agreed-upon value.
Should the two parties not be able to come to an agreement on valuation, “an independent third party will be enlisted to make a determination,” the Journal wrote. Comcast can force Disney to buy its share out in January.
Comcast‘s Past Due Notices
Disney and Comcast’s NBCUniversal each have their own flagship streamers, and WSJ claimed that as the fight over Hulu plays out, Comcast simply stopped doing its share to keep the service going going. Not only did NBCU pull back next-day NBC programming from Hulu in favor of Peacock, its parent company stopped funding Hulu. Disney has been forced to keep it going with what the Journal called “the equivalent of a bridge loan.”
It’s unclear when Comcast stopped funding Hulu or how much it has withheld. If Disney and Comcast reach a deal on ownership, then the two will settle up on past payments.
Disney+ Has Been “Hulking” Up For Over a Year
Disney just announced its plans to integrate Hulu content into Disney+ in the U.S. with a Hulu “tile” by the end of the year, but the WSJ report suggests Disney has been internally talking about this for “more than a year.” The plan even had a Marvel-themed name: “Project Hulk.”
And guess what? That tile was news to top Comcast executives.
You Wouldn’t Like Iger When He’s Mad
Back in 2013 — when Hulu was owned by NBC, Fox, and ABC — there was a plan to sell Hulu. Top suitors included Yahoo, DirecTV, and Time Warner. (Truly, it was another time.) According to the WSJ, Comcast blocked the sale, which infuriated Iger and his team. Comcast believed the offers were too low and assured Disney and Fox that Hulu could grow much larger. The revenue-sharing payouts meant Hulu lost money even as it added subscribers, the Journal wrote.
Shhh… Disney’s Changing the Rules
When Hulu did major deals from its owners ABC, Fox, or NBC, it had to get unanimous approval from all three parent companies to avoid self-dealing. That rule quietly disappeared just before Disney announced in late 2017 its acquisition of Fox, according to the WSJ, which left Comcast unable to block any big decisions (Comcast agreed to be a silent, non-active partner in Hulu as part of it acquiring NBCUniversal in 2011).
Comcast though didn’t find out about the rule change… until September 2018, and reportedly threatened legal action. You know what happened next: Comcast also pursued an acquisition of Fox’s assets and just ended up driving up the price for Disney. By the time the deal closed in March 2019, the Fox price tag was $71.3 billion.
Failure to Launch (Internationally)
The reason Comcast agreed to the rule changes is it believed Disney would work to launch Hulu overseas and boost the streamer’s value. But as WSJ now reports, Disney believes it made no such promise. In 2020, former Disney CEO Bob Chapek made the Star brand a tile on Disney+ overseas as well as the international face of its general entertainment offering.
Cloudy with a Chance of Content
Although it’s now far more likely that Disney buys out Comcast, the reverse of that was considered by Comcast. The hiccup, beyond the money (if Comcast thinks Hulu is worth $70 billion, Disney’s two-thirds would be worth some $47 billion), was cloudiness about if a Comcast buyout would include the rights to all Hulu content.